S.T.Circular No.38/1/2002-CX
7th February, 2002.
F.No.137/29/2001-CX.4
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Sub. : Audit of Service Tax assesses/records
Attention is invited to Board’s Circular No.19/13/96 dt.21.11.1996 wherein instructions were issued for auditing of assesses providing services relating to telephones, insurance and stock broking. The following instructions are issued in partial modification of the said instructions.
2. Since service tax has been in operation for over 7 years now, departmental officers as well as the service providers have by now become familiar with the rules and procedures relating to service tax administration. It has therefore been decided by the Board to extend the coverage of service tax audit to other services also on a selective basis.
3. An Expert Group (EV-07) has already been constituted under the CIDA Project to go into this aspect in details and suggest audit procedures for every service, keeping in mind the specific nature and peculiarity of each service. Once this study is completed it is proposed to bring out a comprehensive Service Tax Audit Manual on the lines of the manual issued for Central Excise Audit Till then, the following guidelines are prescribed for immediately initiating audit of selected service tax assessees .
4. Only those assesses will be taken up for audit who are registered in the Metropolitan cities of New Delhi, Mumbai, Chennai and Kolkata and whose names are given in Annexure - I.
5. In respect of Stock broking, Telephones and non-life Insurance, audit will continue to be done as per norms indicated in Board’s Circular of 21.11.96 and selection of assessees by the Commissioners. In respect of these three services the Audit will, obviously, not be confined to metropolitan cities only.
6. The Audit of assesses listed in Annexure-I should be confined to the accounts for the years 1999-2000 onwards only. In respect of services which have been brought under the tax net in July, 2001, the Audit period will be July 2001 till the date of Audit. The Audit of each selected assessee should be completed in not more than 10 working days.
7. The audit would be conducted as per proforma Annexure- II (enclosed). This proforma is based on the EA-2000 Audit being carried out on the Central Excise side.
8. Efforts should be made to have the Audit done by teams of officers who are already familiar with EA-2000 Audit. Before proceeding with the Audit the teams should familiarize themselves properly with the law and procedures relating to Service Tax. The teams should ensure that during the course of Audit there is minimum hindrance in the normal working of the assessee.
9. Attempt should be made to conduct as many such audits during the remaining months of the current financial year so that short levies detected, if any, can be realized during this year itself.
10. Receipt of this Circular may be acknowledged.
11. Hindi version will follow.
ANNEXURE - I
NAMES OF ASSESSEES FOR SERVICE TAX AUDIT DURING 2001-2002
Sl No / Service / No of assessees / Name of assessee / Commissionerate(1) / (2) / (3) / (4)
1 / Advertising / 1 / Lintas India Ltd. / Mumabi-IV
2 / Ogilvy & Mather / Mumabi-1
3 / Ogilvy & Mather / Chennai-II
4 / Hindustan Thompson Associates Ltd. / Chennai-II
5 / Euro RSCG Adv.(P) Ltd. / Kolkata.1
6 / Hindustan Thompson Associates Ltd. / Kolkata 1
7 / Hindustan Thompson Associates Ltd. / Delhi.1
8 / Lintas / Delhi-I
2 / Pagers / 1 / DSS Mobile / Mumbai-V
2 / Page Point / Mumabai-II
3 / RPG Paging Services (P) Ltd. / Chennai-II
4 / DSS Mobile Communication Lld / Chennai-II
5 / Microwave Communication Radio Ltd. / Kolkata-1
6 / Easy Call Communication(P) Ltd. / Kolkata-1
7 / R.P.G. Pager Services / Delhi - 1
8 / DSS Mobile Communication Ltd / Delhi-I
3 / Couriers / 1 / DHLWorld Wide Express / Mumbai-IV
2 / Prakash Air Freight Ltd. / Mumabi-IV
3 / Safe Express / Chennai-II
4 / .Professional Couriers / Chennai-II
5 / First Flight Couriers Ltd. / Kolkata.1
6 / Safe Express Pvt. Ltd. / Kolkata.1
7 / Overnite Express Ltd. / Delhi.1
8 / Blaze Flash Couriers Pvt Ltd / Delhi- I
4 / CHA / 1 / Damani Shipping Pvt. Ltd. / Mumabi-1
2 / Babaji Sriram Cleaning & Carriers (P) Ltd / Mumabi-1
3 / Vignesh Freight Forwarders / Chennai-I
4 / National Clearing & Shipping / Chennai-I
5 / Lee & Muirhead Ltd. / Kolkata.1
6 / Ripley & Co. Ltd. / Kolkata.1
7 / Lee & Muirhead Ltd. / Delhi-I
8 / P.S. Bedi &Co / Delhi.1
5 / Steamer Agents / 1 / Freight Systems India Pvt. Ltd. / Mumabi-IV
2 / Samrat Shipping & Transport Systems Pvt.Ltd / Mumabi-I
3 / German Express Shipping Agency (I) Pvt. Ltd. / Chennai-I
4 / A S Shipping Agency P Ltd. / Chennai-I
5 / Sea Horse Ship Agencies Pvt. Ltd. / Kolkata.1
6 / Imsa Shipping Agency Pvt. Ltd. / Kolkata.1
7 / Inter Ocean Shipping India (P) Ltd. / Delhi.1
8 / Seal Air Freighter India (P) Ltd / Delhi-I
6 / Air Travel Agent / 1 / Friends Global Travel / Mumbai-IV
2 / Padmaja / Mumabai-II
3 / Bharat Travel Service (P) Ltd. / Chennai-1
4 / Euro Link International Tours & Travels / Chennai-I
5 / Laxmi Narayan Air Travrels( P) Ltd. / Kolkata-1
6 / Thomas Cook (India ) Ltd / Kolkata-III
7 / Pearl International Tour & Travels (P) Ltd. / Delhi.1
8 / American Express / Delhi -I
7 / Man Power Recruitment Agency / 1 / Considia H.R. Services / Mumabi-1
2 / Tristar Consultants / Mumbai-IV
3 / Ma Foi Management Consultant Ltd. / Chennai-II
4 / ABC Consultants / Chennai-II
5 / V.K. Dhawan Consultants / Kolkata-1
6 / Surana Equits(P) Ltd. / Kolkata-1
7 / Oman Consultants / Delhi - I
8 / Leading Age Market Pvt Ltd / Delhi- I
8 / Tour Operator / 1 / Mercury Car Rental Ltd. / Mumbai-I
2 / Kesari Group / Mumbai-IV
3 / GRT Tours & Travels / Chennai-II
4 / Diana World Travel P Ltd. / Chennai-II
5 / Kundu Special / Kolkata.1
6 / Banerjee Special / Kolkata-1
7 / Ashoka Travels & Tours / Delhi.1
8 / KTC India (P) Ltd / Delhi -I
9 / Credit rating / 1 / Lira Ltd. / Mumbai-1V
Agency / 2 / The Credit Rating Information Services Of India Ltd. / Mumbai-IV
3 / ICRA Ltd. / Chennai-II
4 / Flitch Ratings India Pvt. Ltd. / Kolkata-1
5 / ICRA Ltd. / Kolkata-1
6 / ONICRA Credit Rating Agency of India / Delhi - I
7 / ICRA Ltd / Delhi-I
10 / Chartered Accountant / 1 / Patel & Deodhar / Mumbai-IV
2 / Bhuchar & Chandak / Mumbai-IV
3 / Price Waterhouse / Chennai-II
4 / Brahmaya & Co / Chennai-I
5 / Pricewater House / Kolkata.1
6 / Lovelock & Harris / Kolkata.1
7 / S.R. Batliboi & Co. / Delhi.1
8 / Price Water House / Delhi-I
11 / Market Research Agency / 1 / ORG MARG / Mumbai-1
2 / Indica Research Pvt. Ltd. / Mumbai-I
3 / Francis Kanoi / Chennai-II
4 / ORG Marg / Chennai-II
5 / C. MARC (India)Pvt. Ltd. / Kolkata.1
6 / ORG- MARG Research Ltd. / Kolkata.1
7 / Hindustan Thompson Associates Ltd. / Delhi.1
8 / ORG Marg Research Consultancy Group (P) Ltd / Delhi- I
12 / Real Estate Agents / 1 / Mahindra Realty Infrastructure Ltd. / Mumbai-IV
2 / Raheja Construction Pvt. Ltd. / Mumbai-IV
3 / Hanu Reddy Realty / Chennai-II
4 / Residency Properties & Development Ltd. / Chennai-II
5 / N.K. Agarwal Estate(P) Ltd. / Kolkata.1
6 / Champalal & Co. / Kolkata.1
7 / C.B. Richards Ellis South Asia Pvt. Ltd.. / Delhi.1
8 / Cushman & Weikfield India (P) Ltd / Delhi-I
13 / Security Agency / 1 / Monitron Security Pvt. Ltd. / Mumbai-IV
2 / Hindustan Security Force / Mumbai-1
3 / SDB Cisco / Chennai-II
4 / Tamilnadu Ex-servicemen / Chennai-II
5 / Security & Investigation Bureau / Kolkata-III
6 / Spot Light(P) Ltd. / Kolkata.1
7 / Group 4 Securities / Delhi.1
8 / Sentinals Securities / Delhi- I
14 / Underwriter / 1 / Jardine Fleming India Securities Ltd. / Mumbai-I
2 / SBI Capital Markets Ltd. / Mumbai-1
3 / SMIFS Capital Markets Ltd. / Kolkata.1
4 / Sumedha Fiscal Services Ltd. / Kolkata 1
15 / Management Consultant / 1 / Mckinsey & Co. / Mumbai-1
2 / Accenture India / Mumbai-1
3 / KPMG India Pvt. Ltd. / Chennai-II
4 / Flaten Investment Engg. Co. Ltd. / Chennai-II
5 / Price Waterhouse Coopers Ltd / Kolkata-III
6 / Tata Consultancy Service / Kolkata-III
7 / Price Water House Coopers Ltd. / Delhi.1
8 / A.T.Karney / Delhi -I
16 / Scientific & Technical Services / 1 / Empire Industries Ltd. / Mumbai-IV
2 / SASMIRA / Mumbai-IV
3 / Centre For Total Quality Management / Kolkata.1
4 / National Productivity Council / Kolkata.1
ANNEXURE – II
AUDIT NOTE NO. ------
TAX PAYER - M/S ABC
AUDITORS:
S/ SHRI X,Y AND Z
CUSTOMS & CENTRAL EXCISE COMMISSIONERATE, ------
------
OFFICE OF THE COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, INTERNAL AUDIT BRANCH,
------
F.No. ------Dated --- February, 2002
To,
Assistant Commissioner,
Customs & Central Excise, ------
Sub: - Audit Report drawn in respect of Taxpayer – M/s ABC for the period: ------.
Enclosed please find Audit Report drawn in respect of Taxpayer – M/s ABC for the period: ------. In this connection, you are requested to please take immediate suitable action to safeguard government revenue under intimation to the audit.
Enclosure – ------
(XYZ)ASSISTANT COMMISSIONER (AUDIT)
Copy to –
1. The Deputy Commissioner (Prev), Central Excise Hqrs, ------for information.
2. The Superintendent, Central Excise Range ----
3. The Audit Report Master file
(XYZ)ASSISTANT COMMISSIONER (AUDIT)
Index
SR. NO. / ITEMS / PAGE NO.1. / Summary of audit reports / 1
2. / Summary of audit results
3. / Detailed Audit Para
(Annexure – ‘A’)
4. / Enclosures
(Annexure – ‘B’)
5. / Working Papers
(Annexure – ‘w/p – ‘A’ to ‘—’)
PART-1
SUMMARY OF AUDIT REPORTS
1. / Name & Address of the Taxpayer / M/s ABC, ------2. / Its HO, Regional/ Branches offices etc.
3. / Status of the Taxpayer
4. / Jurisditional Commissionerate/ Division/ Range
Name of the Range Supdt/Inspector / Commissionerate -
Division -
Range -
Shri:
5. / Name of taxable services provided to clients
6. / Registration No.
7. / Exemption Notification No. & its effective date along with gist of exemption notification
8. / Date of Last Audit
9. / Period for which Current Audit undertaken
10. / Dates on which audit undertaken
11 / Unconfirmed demand, if any
12. / Confirmed demand if any
13. / Appeal filed if any
14. / Tax, Interest & Penalty paid during the current audit period
15. / No. of Revenue Paras
16. / No. of Procedural Paras
17. / Total Revenue involved in audit paras
PART - 2
SUMMARY OF AUDIT RESULTS
[Provide an outline of important and material non-compliance issues identified during the Audit. Indicate if the TAXPAYER has agreed to improve]
------
The important and material non-compliance issues identified and reaction of the assessee is indicated in the table given below: -
AUDIT PARA NO. / GIST OF OBJECTIONS / REVENUE IMPLICATIONS, IF ANY,(IN RS.) / TAX PAYER’S AGREEME - NT YES/ NO, IF NO REASONS FOR DISAGREEMENT / DEPARTMENT -'S CONCLUSION WITH REASONS.
TOTAL REVENUE INVOLVED = / Rs.-
(XYZ)
ASSISTANT COMMISSIONER (AUDIT)
PART- 3
WORKING PAPER
1. PRELIMINARY REVIEW:
1.1 audit file review:
[Review audit file to determine nature of the organisation, its operations, service provided, results of last audit and the reasons it was selected for audit this time.]
1.2 Review information in Range Office:
[Review information available in the Range office, i.e. Returns filed, Tax paid & List of records/returns filed. Check if any anti evasion action is in progress]
1.3 Review Amendment in Laws:
[Review amendment in laws after the last audit and its compliance]
1.4 Develop tentative plan for audit, identifying potential area for audit:
[Where necessary, discuss tentative plan with the AC/DC or JC/ADC]
SR. NO. / AREA / PERIOD / SELECTION1.
2.
3.
1.5 Contact tax payer & set up an appointment:
[Keep a log where taxpayer appears to be stalling.]
2. Gathering and Documenting Systems Information:
2.1 Interview & organisational information:
A). Person (s) Interviewed and Title:
[Name of the persons who have been interviewed and their statements in brief]
B). Organisational Information:
[Identify the head Office/ registered office or regional/ branch offices of the taxpayer, location of its operations and location of its accounting records. Also the offices who are billing services]
C). Organisational Type and Ownership:
[Confirm organisation, whether proprietorship, partnership or a Pvt Ltd or Ltd company]
D).Organisation Chart:
[Obtain the organisation chart or describe the organisation structure if chart is unavailable. Note responsibilities of key personnel and any recent changes, particularly in personnel involved in tax accounting.]
2.2 Financial and Tax Accounting Information:
A). Business Records:
[Obtain audited financial statements, trial balance and chart of accounts. In case of audited statements, note name of the chartered accountants and review any notes to the financial statements.]